There won’t be any gradual increase, the increase in margins is going to be in phased manner as mentioned in this post.
When is this applicable from?
This SEBI circular says that there will be a penalty if trades are allowed without sufficient VAR+ELM or 20% for stocks, and SPAN+Exposure from Dec 1st 2020 even on an intraday basis.
- Dec 2020 to Feb 2021 - penalty if margin blocked is less than 25% of VAR+ELM ( or 20% of trade value) for stocks or SPAN+Exposure for F&O. (Max leverage of 5% or 20 times for stocks)
- Marc 2021 to May 2021 - penalty if margin blocked less than 50% of minimum margin required. (Max leverage of 10% or 10 times for stocks)
- June 2021 to Aug 2021 - penalty if margin blocked less than 75% of minimum margin required. (Max leverage of 15% or around 7 times for stocks)
- From Sept 2021 - penalty if margin blocked less than 100% of minimum margin required. (Max leverage of 20% or 5 times).
The above essentially means that in a phased manner the broking industry will move to a structure where intraday leverages offered can’t exceed what is already offered by VAR+ELM (or 20%) for stocks and SPAN+Exposure for F&O by Sep 2021.